Costs of Setting-up a Business in Spain

I was recently contacted by a British national, resident in Spain, who is interested in setting-up a new business in Málaga province – she wanted information on the likely costs and the legal options when starting a business here. Below are the answers, that others may find useful.

While we will maintain two different brands of the company, there will be only one company that will accept payments from clients so, would we have to set up two limited companies or only have one?

Only one limited company (sociedad limitada) would be needed.

 

What is the cost of setting up a limited company in Spain?

There’s no fixed cost. It would depend on several factors (such as: initial share capital, number of partners, extension of the incorporation deeds, …). The costs for setting-up an ordinary limited company (3,000 euros initial share capital, with 1-4 shareholders usually are:

  • 3,000 € (initial share capital). This is not actually a cost per se. You have to deposit this amount in a Spanish bank account and once the company is registered, you are free to use this amount to invest in assets on behalf of the company.
  • setting-up cost: 1,500 € – 2,000 € (including notary fees, mercantile registry – company´s name reservation and certification, lawyer´s fees …)

 

How long does the process take to set-up a limited company in Spain?

The process usually takes 4-6 weeks, once the shareholders obtains their NIE; in order to become a shareholder, every partner will need a foreigner’s ID number (NIE).

 

What will your fees be?

Our fees for an ordinary limited company set-up are 600 € + IVA (21%) (please note that our fees are included in our answer regarding set-up costs above).

 

What will your monthly or annual fees be once the business has been started to take care of tax returns etc?

We normally charge a basic fee of 120€ + IVA* to limited companies, which covers the following costs:

  • Maintenance of legally required records
  • Quarterly IVA returns
  • Annual Corporation Tax return
  • Annual  Return (Abbreviated accounts, balance sheet, profit and loss statement, annual report)

*IVA charged is deductable against any IVA paid. The monthly fee can vary depending on the number of transactions that are invoiced by the business.

 

What is the most cost effective way to start a limited company in Spain? 

We recommend setting-up an ordinary limited company (sl), 3,000 euros initial share capital.

 

What is the most tax efficient way for a company to run in Spain?

It’s not easy to answer … if your profit is not too high (10,000 euros – 12,000 euros), the taxation for a sole-trader or self-employed is better than the taxation for a limited company. With a larger profit, taxation would be better for limited companies.

 

Would we be better to register the company in Gibraltar and have bank accounts in Gibraltar?

Most likely the taxation would be lower, but for commercial purposes I don’t recommend it (companies and customers in Spain are usually wary of companies from Gibraltar, because Spanish rules and warranties do not apply.) Also, as a resident Of Spain, you will be liable for personal taxation in Spain on worldwide income which will mean that any income derived from the profits of the company will be subject to Spanish income tax anyway and you will also most likely need to hire two sets of professionals to manage your fiscal responsibilities, thus increasing your cost base.

 

Would both I and my business partner have to be registered as self-employed ‘autonomos’ or could one person be autonomo and the other person stay on a minimal contract for Social Security purposes?

It would depend on your role on the company:

  • directors who live in Spain must be registered as autonomo (sole-trader).
  • partners or shareholders who don’t work in the company do not need to be registered with the social security system.
  • partners or shareholders who work in the company: it would depend on their percentage of participation in the company.

 

Could the company name be the name of the registered sole-trader?

Yes. you can use either of the following as the company name:

  • name of one of the shareholders.
  • invented or figurative name

Obviously the company name may not already be registered by another entity.

 

I presume that we would have to keep all our receipts on a monthly basis, so that they could be deducted as business expenses – is this correct?

Yes

 

As we would both be working from home and not have business premises are we able to use both of our internet and both our phone bills as business expenses or would we need to take out new services in the company name?

You will need to place any utilities or other services in the company’s name.

Client Testimonials

Below is a list of recent reviews received from our clients, obtained via the Wufoo client survey platform:

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    Darren & Gemma Nesbitt, Valencia
    Tuesday, September 11, 2018
    Inmaculada has been of excellent service to us, as a family and in helping to set up a business in Spain. She has now undertaking several project for us and has delivered high quality on all of them. ...Perfect service!
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    Tuesday, September 11, 2018
    Extremely accommodating and highly professional and very pro active. Excellent result and service. Highly recommended.
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    Jovie, Malaga
    Wednesday, September 05, 2018
    My lawyer Alvaro was extremely helpful and very efficient. I would definitely recommend his services to friends.
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    Albert Roldan, France
    Tuesday, September 04, 2018
    Alfonso was extremely helpful, particularly since we requested a quick turnaround for the 18 documents needing to be translated from English and French to Spanish.

    He was fluent in our phone conver...sations and email correspondence, he never misunderstood what our requirements were. He was was clear in explaining how this process works and what the price included.

    I would highly recommend him to anyone needing these services.
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    David Grundy, UK
    Friday, August 24, 2018
    Jose was very polite and we received an excellent service from him. Nothing was to much trouble and his communication was 2nd to none. Highly recommended!
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    Thursday, August 16, 2018
    Inma was very helpful, always happy to assist. I particularly appreciated her professionalism. I would not hesitate to recommend her services to friends.
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    Daniel Spitzhorn, Spain
    Tuesday, August 14, 2018
    Miguel in Oviedo helped us during the process of buying a flat in Asturias. He was just brilliant!
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    Tracey Iliffe Bradley, UK
    Tuesday, August 14, 2018
    Rosa dealt with everything efficiently and promptly and went beyond our expectations by helping us to open a Spanish bank account and deal with other minutiae.
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    Erslaan Ahmed, Bangladesh
    Friday, August 10, 2018
    Gave very good advice and provided an excellent solution. Inma is very professional in her work. I would recommend her services to friends.
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    John Ryan, Derby, England
    Wednesday, August 08, 2018
    A perfect relationship between client and professional. Nothing was too much trouble.

    Went over and above his job and more. I would only use his services if I need legal services. I were very lucky... to find Jose first time round.

    Thank you jose
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    Everything was as it should be: excellent. Had to pay by bank transfer and maybe would have liked another means of paying.
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    Delbecq, France
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    Cristina, is extremely professional, fast, responsive understand and explain well, she always found appropriate solutions and provide good advices.

    She know how to deal and negotiate, and look self...-confident, and make you feel less stress, you can trust here.

    The value for money is good, and she is up to date with technologies (mail/google app etc… very practical).

    It was a pleasure and a great luck to found here and have here at my side for my case. For anything, i should need a lawyer she will be the one I’ll work with
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    Monday, July 30, 2018
    My lawyer Carmen is a nice lady ,very professional. I would like to be her client again if I need a lawyer in the future.
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    Friday, July 27, 2018
    Maria was extremely helpful and professional, and put herself out to satisfy my needs.

    I contacted her on a number of occasions and always had very good advise on costs etc.

    Her English was imp...eccable and could always be understood.
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    Francisco was very easy to deal with. Very professional. Would not hesitate to recommend him to friends.
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    Jaime was quick, made good suggestions about remembering to revoke the power in the future, very responsive - changing a meeting to suit our timetable - and even took us round to a DHL office and arra...nged for the document to be courriered after it was signed.
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    Janet/Alex Olsen, Newcastle
    Wednesday, July 25, 2018
    Overall the service provided by Oliver was exceptional.

    My mother and I couldn't of asked for more from him as he sorted out our family affairs. His attitude, attention to detail and promptness wh...ile helping us were second to none.

    His English is top notch and his way of explaining and or guiding you through what needs to be done makes the whole experience easier than expected.

    We'd recommend Oliver to anyone in need of his expertise while dealing with issues in Tenerife.
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    Neil Linter, London
    Tuesday, July 24, 2018
    Cristina immediately understood our requirements and was essential in guiding us through a very tricky process.
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    Jason Yorke, United Kingdom
    Thursday, July 19, 2018
    Beatriz was really helpful and always kept me informed at all stages. She is very professional and a pleasure to deal with.
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    Mr David P Robson, Valancia
    Thursday, July 12, 2018
    My lawyer Francisca offered value for money and was very helpful. Will use her again.
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    Richard Day, London and Barcelona
    Thursday, July 05, 2018
    My initial call to your service desk was responded to by Oscar very quickly.

    I appreciated his time as I outlined my issue, a problem with the building community and administrators. At the end of ...the call he provided clear guidance on next steps.

    Furthermore he quickly turned around the issue with an excellent drafted response for which I could not of hoped to be better worded. It was comprehensive and aligned perfectly with what I felt was needed.

    Excellent value for money and most definitely I would highly recommend Oscar.
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    Søren Aabel Hammer, Malaga
    Thursday, July 05, 2018
    Beatriz was professional and quick to respond. Would definitely recommend to friends.
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    Patrick Crean, Almerimar
    Thursday, July 05, 2018
    Juan was fantastic. Very easy to understand and very pleasant. I would definitely use his service again.
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    Damien Stephan, Benidorm
    Thursday, July 05, 2018
    The whole process from start to finish was straightforward and well explained. I honestly cannot recommend them enough!

    They really went out of their way to be helpful and kept me up to date at ev...ery opportunity. Excellent value for money from some really nice and genuine people. True professionals.

    Wouldn’t hesitate to use again in the future.
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    Claire, Fuengirola
    Wednesday, July 04, 2018
    Alvaro assisted me during my experience at advocate abroad, and he was so kind. He answered any questions I had, and made me feel completely at ease.

    I knew I was in the hands of a professional. H...e could not have done more to help me.
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    Paul and Joyce Rose, Mijas, Malaga
    Wednesday, July 04, 2018
    Extremely helpful and very professional. Will definitely use Alvaro next time we require legal advice.
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    Nigel Whinnett, Esher, UK
    Wednesday, July 04, 2018
    Professional, friendly, efficient service, good value, a pleasure to use the services of the lawyer and his team. In depth knowledge of the relevant laws, taxes etc.

    Would highly recommend and use ...again.
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    Claire O'Gara, Fuengirola
    Wednesday, June 27, 2018
    I liked Alvaroós enthusiasm, and the great level of customer service. He always answered my questions thoroughly.
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    Mrs Susan Vickery, Silves, Portugal
    Tuesday, June 26, 2018
    Good advice, very helpful and fast. Would definitely recommend Luis to friends.

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